State Pays Integrator For Training? $256,000 On A Yearly Basis? Am I Reading This Right?

Jeremiah Boughton

Am I reading this right? I hope not. Link - California is paying a security dealer/integrator for personalized manufacturer training, business skills, computer skills, and self improvment on a yearly basis for a couple hundred thousand plus?

This security dealer/integrator is the most successful independent dealer in the U.S. and if I'm not mistaken, its family company is a Medical Alarm company and is one of the leading medical device monitoring companies in the nation. The company also owns central stations.

Please tell me I'm confused and this is not what it means. If they are getting "big" state money for this training, I hope they do not cross state lines and compete with businesses who have to put the cost of training into their quotes. And if they get this money, is it fair for them to compete on state jobs? Thoughts on state training $'s?

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Rukmini Wilson

No federal dollars, nor even state dollars out of the general fund. Instead ETT has been historically a closed system. Taxing only those employers who could also provide the training, and therefore benefit from ETT. Financed by a employer tax of up to $7.00 a year per employee.

The ETT provides funds to train employees in targeted industries to improve the competitiveness of California businesses. The ETT funds promote a healthy labor market and helps California businesses invest in a skilled and productive workforce and develop the skills of workers who directly produce or deliver goods and services. The ETT is an employer-paid tax. The maximum tax is $7 per employee, per year ($7,000 x .001).

What it means is this, everybody starts in the hole, then thru training you can get 'reimbursed'. Anyone who pays in, can train and get money out. Now Bay have been reimbursed more than they paid in, it's possible. But that's only if there are other companies who paid the tax, yet opted not to provide training.

So maybe we should really be asking why aren't some employers training anyone?

*Note in 2006 this was defintely the case, but I did read somewhere something about them snagging some Obama money recently, sorry Jeremiah :( I'm still looking for that link...

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Rukmini Wilson

Did you see that $10,000 and $13,000 went to the 3rd party company who put the proposals together.

I think it's actually a little more, $10,000 for proposals and up to $16446.30 (13%) for managing the training. Bay Alarm definitely left some money on the table there by not doing their own administration.

It's a mandatory zero-sum game (less administrative costs), so the money is just changing hands between those who are running training programs and those who are not. So even if this is a windfall for Bay Alarm, and makes it easier for them to compete, it makes other companies equally less able to compete, because they just pay the tax with no benefit. Also, Bay's payroll cost increases, because the state expects the wages of the trained people to increase after the training. Do you still feel it's unfair somehow?

It seems alot of states have similar programs, and some even come directly out of the state's general fund, like this one in Wisconsin where employers can get 'grants' up to $400,000 for their training program. Talk about a sweet deal!

I suppose it's a good idea for companies to check their local state's programs to see what funds are available...

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Jeremiah Boughton

Good for them for taking advantage of a state training dollars as that is what it is for.

or

These type of programs are meant for manufacturing type of small businesses to compete with the major corporations and not for companies who do a lot of Public Bidding to win work.

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Lets say they paid $3,500 in ETT tax per year for 6 years for 500 workers. That equals $21,000 that they paid into to this ETT fund. In that 6 years, they have recieved an estimated $450,000 in training money from the State of California. This does not account for any more money they have recieved between 2012 and 2014.

Paid in $21,000

Recieved $450,000

It seems the system is broken.

On top of that, if they are training front line employees basic skills and basic security skills, then why do these same employees need to be retrained 2 more times in a 6 year period and for 2 and 2 1/2 times more money? Are they really retaining employees? Are these employees rising through the ranks? Or are they leaving for another industry or to another security integrator where they require more money?

Should companies hire low skilled workers for their front line and as technicians and then train them? Do you hire low skilled sales people and give them basic training and have a "Turn-n-Burn" sales force? Here is a Craigslist ad for hiring sales people for this company. They seem to seek highly skilled people and College Degrees.

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Rukmini Wilson

If you mean broken in the sense of 'gamed', with some companies acquiring, thru connections, influence or just being smart enough to dig up every dollar they can possibly get their hands on, regardless of its intended usage, then I agree it certainly could be the case.

If you mean broken in the sense of 'unfair' to other states in the sense of "hey, how come they get free training in CA, we don't", then I'm not following, because

a) that also means that other CA firms are penalized to an offsetting degree and therefore less able to compete inside or outside of CA

b) certainly all states have companies that aggressively seek out all government $.

This is a national condition, found everywhere from Frisco Bay to Sheepshead Bay, and every Bay in between, and so in no case should it turn any particular Bay Green with envy.

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Rukmini Wilson

Gamed, used in the sense above, should be written game'd, because it is actually a contraction of 'game that has been rigged'. And rigging a game has that sorta carnival feel that everyone is familar with, where an invisible stick is placed inside a milkcan, frustrating valid attempts to knock it over even with our mightyest fastball. There are endless variation of this type of grift. And that's sinister, for sure. And gamed.

But there is a whole nother type of 'amusement' at the carnie, and it's not nearly as sinister. Take for example the game known as 'Cover the Spot', where you get five CD sized steel discs to drop from an inch or so high on to a wood board, with the object being to cover all of the red spot with the discs. The carnie will demonstrate how easy it is. Once. twice. Then it's your turn as you almost do it, once, twice, doesn't matter how many time you try, can't do it. This game is NOT rigged per se. It's just deceptively difficult to do, especially without studying the game, which you haven't and the carnie has. And for me this is not gamed, this is the carnie just 'playing the game'. And so some companies out and out cheat (Gamed), while other just study the game and use various legal but questionable tactics to get ahead. Take a look at how Google goes to extreme lengths to avoid paying taxes for a good example. This is playing the game.

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